Suppressed v. Suppressed

Filing 136

MEMORANDUM Opinion and Order. The Court grants Schoewe and Gentile's motions to dismiss 117 & 122 . Moreover, because plaintiff has been unable to state viable claims against Schoewe in Counts I, IV, and V or a viable kickback claim against Gentile in Count II, despite having had four opportunities to do so, the Court dismisses those claims with prejudice. Signed by the Honorable Jorge L. Alonso on 12/15/2015. Notice mailed by judge's staff (ntf, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
UNITED STATES OF AMERICA
and STATE OF ILLINOIS ex rel.
KENYA SIBLEY,
Plaintiff,
v.
A PLUS PHYSICIANS BILLING
SERVICE, INC., HANDRUP and
ASSOCIATES, ERIC SCHOEWE,
LAURIE GENTILE, and THEODORE
HANDRUP,
Defendants.

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13 C 7733

Judge Jorge L. Alonso

MEMORANDUM OPINION AND ORDER
Relator, on behalf of the United States and the State of Illinois, sues defendants for their
alleged violations of the federal and state False Claims Acts (“FCAs”) and the Illinois Insurance
Claims Fraud Prevention Act. Defendants Laurie Gentile and Eric Schoewe have filed Federal Rule
of Civil Procedure (“Rule”) 12(b)(6) motions to dismiss Count II, and Counts I, IV, and V,
respectively, of the third amended complaint.1 For the reasons set forth below, the Court grants both
motions.

Facts
From June 2011 to July 2012, relator worked as a medical biller for defendant A Plus
Physicians Billing Service, Inc. (“A Plus”). (3d Am. Compl. ¶ 8.) A Plus is a billing agency that

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Defendants A Plus Physicians Billing Service, Inc., Handrup and Associates, and
Theodore Handrup have answered the third amended complaint.

submits claims for reimbursement to public and private insurers on behalf of its healthcare-provider
clients and, in return, receives a percentage of the reimbursement amounts recovered. (Id. ¶¶ 9, 39,
43, 47.) Defendant Schoewe is the president and a co-owner of A Plus and “is primarily responsible
for . . . the submission of claims for reimbursement to public and private insurers.” (Id. ¶¶ 10-11.)
Defendant Gentile was relator’s supervisor at A Plus until early 2012 and assisted Schoewe with
claims submissions. (Id. ¶¶ 12-13.)
Health care providers and billing agencies like defendants use Current Procedural
Terminology (“CPT”) codes, which are “a uniform way to describe medical, surgical and diagnostic
services provided to patients,” to bill private and governmental insurers. (Id. ¶¶ 30-31.) To properly
submit a claim, A Plus should receive a “superbill” from a client that sets forth, among other things,
the name of the patient and healthcare provider, the service provided, the date and location of the
service, the proper CPT code, and the amount charged. (Id. ¶¶ 30, 33, 87.) An A Plus biller then
inputs the CPT codes and the codes for the healthcare provider and location into a computer program
that generates a claim form that is sent to A Plus’ billing vendor for submission to the appropriate
insurer. (Id. ¶¶ 78-81.)
In reality, however, A Plus’ clients, including defendant Handrup and Associates, did not
provide some or all of the necessary information on the superbill. (Id. ¶¶ 46, 50, 87.) Thus, A Plus
had a “default” protocol pursuant to which the codes would be added based on the assumption that
subsequent treatments replicated the first. (Id. ¶¶ 46, 50, 88.) Gentile and Schoewe trained relator
and other billers to engage in default billing and “order[ed] employees [including relator] to create
billing information and alter bills” according to the default protocol. (Id. ¶¶ 52, 53, 88, 109.) In
addition, Gentile filled in CPT codes, Place of Service (“POS”) codes, and diagnoses on superbills

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without supporting documentation, told relator to change or select certain CPT and POS codes or
to use different CPT codes to bill different insurers for the same service, and told relator to change
provider names to those covered by the patients’ insurance – all to maximize reimbursements. (Id.
¶¶ 72-73, 89-96, 98-100, 103-05, 108, 110, 112-13, 115.) Schoewe was “aware of the widespread
submission of bills where inadequate information had been provided.” (Id. ¶ 116.)
Starting in October 2011 and continuing throughout her employment, relator repeatedly told
Schoewe that filling in blank superbills and changing codes on bills was illegal. (Id. ¶¶ 54-57, 6062, 65-66, 110, 131.)
One morning in early 2012, relator opened an envelope with “Laurie” handwritten on it. (Id.
¶¶ 125-27.) Inside the envelope was a check from Handrup payable to Gentile. (Id. ¶ 127.) Relator
resealed the envelope and gave it to Gentile. (Id. ¶ 128.) Later that day, Gentile told relator,
“‘[O]nce you take over this account you will be able to get checks like this. Just hang in there.’” (Id.
¶ 129.)
In March 2012, shortly after Gentile announced her impending retirement, relator met with
Schoewe, Gentile, and the principals of Handrup and Associates, Dr. Theodore Handrup and Mrs.
Cynthia Handrup, to discuss relator’s taking responsibility for the Handrup account from Gentile.
(Id. ¶ 58.) During the meeting, Dr. Handrup “sought assurances that the same methods of blank
superbilling, alterations to the provider identity and other frauds would continue in the same fashion
as Ms. Gentile had billed” and that relator would “avoid raising any ‘red flags’” with Medicare. (Id.
¶ 59.) After the meeting, relator told Schoewe that she would not bill illegally and gave him
documents that “evidence[d] . . . the frauds which she had been complaining about.” (Id. ¶ 60.)

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“Schoewe told [relator] to keep billing the same way, and in the meantime, he would reach out to
Handrup’s physicians to request that they provide additional documentation.” (Id. ¶ 61.)
From March through July 2012, relator was in charge of the Handrup account and she
refused to make claims for bills with incomplete information. (Id. ¶¶ 62, 140.) Schoewe told her
“that he could not risk losing the Handrup account” and asked her to “fill in blank superbills.” (Id.
¶ 62.) When she refused, Schoewe ordered her to get the claims approved. (Id. ¶¶ 62, 140-41.)
On June 21, 2012, relator told Dale Schroeder, a Handrup employee, in an email that she
would not make changes to superbills, as Schoewe had asked her to do and Gentile had previously
done, because it was illegal to do so. (Id. ¶¶ 65-67.) Relator copied Schoewe on the email. (Id. ¶
65.)
In July 2012, relator took three weeks’ medical leave from work. (Id. ¶ 142.) When she
returned in August, Schoewe told her that A Plus was able to generate more revenue from the
Handrup account in her absence and asked if she could maintain that level of revenue generation.
(Id. ¶ 143.) Relator said she would not submit improper claims, and Schoewe fired her. (Id.)

Discussion
On a Rule 12(b)(6) motion to dismiss, the Court accepts as true all well-pleaded factual
allegations of the complaint, drawing all reasonable inferences in relator’s favor. Hecker v. Deere
& Co., 556 F.3d 575, 580 (7th Cir. 2009). “[A] complaint attacked by a Rule 12(b)(6) motion to
dismiss does not need detailed factual allegations” but must contain “enough facts to state a claim
for relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).

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Gentile’s Motion
Gentile contends that the allegations of the third amended complaint do not state a viable
federal FCA kickback claim against her. See 42 U.S.C. § 1320a-7b(b) (“Anti-Kickback Statute”)
(making it a felony “[to] knowingly and willfully solicit[] or receive[] any remuneration (including
any kickback, bribe, or rebate) . . . in return for purchasing . . . or ordering any good . . . [or] service
. . . for which payment may be made in whole or in part under a Federal health care program”); U.S.
ex rel. Sharp v. Consol. Med. Transp., Inc., No. 96 C 6502, 2001 WL 1035720, at *6-10 (N.D. Ill.
Sept. 4, 2001) (recognizing a cause of action under the FCA predicated on a violation of the
Anti-Kickback Statute). To state such a claim, relator must allege, with the specificity required by
Rule 9(b), that Gentile: “(1) knowingly and willfully (2) offered[,] paid[, solicited or received] (3)
remuneration (4) in return for purchasing or ordering any item or service for which payment may
be made under a federal health care program.” United States v. Omnicare, Inc., 11 C 8980, 2014
WL 1458443, at *9 (N.D. Ill. Apr. 14, 2014); see 42 U.S.C. § 1320a-7b(b). Plaintiff’s “kickback”
allegations are that: (1) relator, unbeknownst to Gentile, saw a check, in an unspecified amount,
from Handrup payable to Gentile; and (2) though Gentile did not know that relator had seen the
check, Gentile later told relator that relator could get “checks like this” once she took over the
Handrup account. (3d Am. Compl. ¶¶ 126-29.) Given these disjointed allegations, it is not
reasonable to infer that Gentile’s “checks like this” comment even refers to the check plaintiff saw,
let alone that the check was a kickback from Handrup. Accordingly, the Court grants Gentile’s
motion to dismiss Count II.

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Schoewe’s Motion
In Count I, relator alleges that Schoewe violated § 3729(a)(1)(A) and (B) of the federal FCA,
which provides:
[A]ny person who . . . knowingly presents, or causes to be presented, a false or
fraudulent claim for payment or approval . . . [or] knowingly makes, uses, or causes
to be made or used, a false record or statement material to a false or fraudulent claim
. . . is liable to the United States Government for a civil penalty of not less than
$5,000 and not more than $10,000 . . . plus 3 times the amount of damages which the
Government sustains because of the act of that person.
31 U.S.C. § 3729(a)(1)(A), (B). To state a viable claim under § 3729(a)(1)(A), relator must allege
that Schoewe presented, or caused to be presented, a claim for payment to the United States that he
knew was false or fraudulent. U.S. ex rel. Fowler v. Caremark RX, L.L.C., 496 F.3d 730, 740-41
(7th Cir. 2007), overruled on other grounds by Glaser v. Wound Care Consultants, Inc., 570 F.3d
907, 920 (7th Cir. 2009). To state a viable claim under § 3729(a)(1)(B), relator must allege that
Schoewe knowingly made or caused to be made a false statement to receive payment from the
government. U.S. ex rel. Walner v. NorthShore Univ. Healthsys., 660 F. Supp. 2d 891, 896 (N.D.
Ill. 2009). Moreover, both claims must be pleaded “with particularity” as required by Rule 9(b).
Id. at 895-96; see U.S. ex rel. Garst v. Lockheed-Martin Corp., 328 F.3d 374, 376 (7th Cir. 2003)
(applying Rule 9(b) to FCA claims).
Schoewe argues that relator’s allegations do not support the inference that he knowingly
made or caused a false claim to be made to the government. The Court agrees. Relator alleges that,
(1) at unidentified times over an eleven-month period, Schoewe gave her unidentified superbills that
were missing necessary information; (2) at unspecified times, and over relator’s objections, Schoewe
told her to fill in codes and change points of service and provider names on unspecified bills; and
(3) Schoewe “personally submitted a majority of A Plus’ claims including those claims which
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[relator] told him were fraudulent.” (3d Am. Compl. ¶¶ 41-42, 46, 51-52, 54-57, 60-62, 65-67, 10910, 131, 141.) These allegations do not sufficiently state “the who, what, when, where, and how”
of the alleged fraud, DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir. 1990), and thus do not
state a federal FCA claim against Schoewe. See Garst, 328 F.3d at 376 (noting that the district court
had instructed the plaintiff “(1) [to] identify specific false claims for payment or specific false
statements made in order to obtain payment; (2) if a false statement is alleged, connect that statement
to a specific claim for payment and state who made the statement to whom and when; and (3) briefly
state why those claims or statements were false”) (internal quotation marks and emphasis omitted).
In Count IV, relator alleges that Schoewe violated the Illinois False Claims Act (“IFCA”),
which “mirrors the [FCA], imposing liability on those who submit or cause the submission of false
claims to the State.” Mason v. Medline Indus., Inc., No. 07 C 5615, 2009 WL 1438096, at *2 (N.D.
Ill. May 22, 2009); see 740 Ill. Comp. Stat. 175/3(a)(1) (imposing liability on any one who
“knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval”
or “knowingly makes, uses, or causes to be made or used, a false record or statement material to a
false or fraudulent claim”). In Count V, she alleges that Schoewe violated the Illinois Insurance
Claims Fraud Prevention Act by submitting false insurance claims. See 740 Ill. Comp. Stat. 92/5(b),
15(a) (creating a private cause of action against any one who violates the criminal code sections
relating to insurance fraud); 720 Ill. Comp. Stat. 5/17-10.5(a)(1) (stating that a person commits
insurance fraud when he “knowingly obtains . . . or causes to be obtained, by deception, control over
the property of an insurance company . . . by the making of a false claim or by causing a false claim
to be made . . . intending to deprive an insurance company . . . permanently of the use and benefit

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of that property”). Because viable claims under these statutes require essentially the same
allegations as a viable federal FCA claim, which plaintiff has not stated, these claims fail as well.

Conclusion
For the reasons stated above, the Court grants Schoewe and Gentile’s motions to dismiss
[117 & 122]. Moreover, because plaintiff has been unable to state viable claims against Schoewe
in Counts I, IV, and V or a viable kickback claim against Gentile in Count II, despite having had
four opportunities to do so, the Court dismisses those claims with prejudice.
SO ORDERED.

ENTERED: December 15, 2015

__________________________________
JORGE L. ALONSO
United States District Judge

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